Daewoo warns on Madagascar plans

South Korea's Daewoo Logistics has warned it may delay its plans to plant corn in Madagascar following the recent violence in the African nation.

Daewoo's announcement comes after two weeks of unrest on the island state that has caused more than 125 deaths.

The violence has stemmed from a row between the government and opposition.

Daewoo plans to build a corn plantation on Madagascar that is half the size of Belgium. It also blamed lower global corn prices for the possible delay.

'No rush'

The company first announced in October that it aimed to plant corn on one million acres of land in Madagascar.

Political instability in the country has also reduced its merit

Daewoo's Shin Dong-hyun

It said it had leased the land for 99 years, and hoped to produce five million tonnes of corn a year by 2023, mostly to meet the growing demand for corn in South Korea, which is the world's third largest importer of the crop.

Daewoo also plans to grow palm oil on a further 300,000 acres of land in Madagascar.

"We are not in a rush to push for the plan and want it to be delayed because weak corn prices and difficult financing conditions have made the deal less attractive," said Shin Dong-hyun, who is in charge of the project at Daewoo.

"Political instability in the country has also reduced its merit...we have done everything we are obliged to do under the contract and are awaiting a response from the Madagascar government to take the next step."

Analysts said the government's decision to lease the vast quantity of land to Daewoo was a background factor to the political violence.

While President Marc Ravalomanana has strongly backed the deal, which would create hundreds of jobs for Madagascan farm workers, opposition leader Andry Rajoelina is opposed, saying too many farmers would lose control of their land.

Madagascan analysts have said they fear that much foreign investment could leave the country unless the political dispute is rectified.

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